Tehran House Sales Picking Up

District One, covering Tehran’s upscale neighborhoods, continues to be the priciest area in the capital, as buyers paid an average of 106.37 million rials ($2,536) per square meter for homes in that area. The district accounted for 4.8% of the total resid

Home sales in Tehran reached 17,800 during the ninth month of the current fiscal to December 21, registering a 50% surge compared with the same period last year.

The latest figures–also confirmed days ago by the Ministry of Roads and Urban Development's Housing Office– have been interpreted by analysts as a sign that the key housing market is emerging form a long slumber.

Central Bank of Iran – in charge of releasing official economic data – reviewed real estate performance during the month in the latest issue of “Trends in Tehran Housing Market.” The report indicates that prices grew by 4.1% and 14.9% compared with the previous month and the same period last year, respectively.

According to the report, the average price of an apartment in Tehran during the aforementioned month reached 51 million rials ($1,218) per square meter.

District One, covering Tehran’s upscale neighborhoods, continues to be the priciest area in the capital, as buyers paid an average of 106.37 million rials ($2,536) per square meter for homes in that area. The district accounted for 4.8% of the total residential real estate deals in Tehran during the period.

District 18 in the southwest accounted for 1.5% of home sales in the capital during the month to December 21 and the lowest average price at 24 million rials ($574) per square meter.

District Five on the western flank, recorded the largest share of home deals at 14.9%. The average price of apartments in the area was 59.78 million rials ($1,430) per square meter which, according to CBI statistics, is considered to be above Tehran's average price. Districts four and two had 11.4% and 9.9% share of the total deals respectively to be accounted as most active districts after District Five.

On the Upside

On a nine-month basis, realtors in Tehran recorded131, 500 sales since the beginning of the fiscal year in March, recording a 12% growth year-on-year.

During the same period, the average price of a residential unit in capital also experienced a year-on-year growth of 8% to reach 47 million rials ($1,124) per square meter.

Newly-built homes (less than five years old) accounted for 48.8% of the total deals, a drop of 3.7% compared with the same period last year. Houses 16-20 years old accounted for 11.7% of the total sales, marking 3.5% growth y/y.

As the report indicates, residential units older than 20 years and apartments that were 6-10 years old also experienced an increase of 97.1% and 53.4% in sales YOY, marking 9.8% and 14.9% of the total number of deals, respectively.

Homes smaller than 80 square meters accounted for 49.4% of the total deals, indicating the unpopularity of larger apartments at a time when homebuyer’s purchasing power has taken a hit. Almost 32.1% of houses were sold for a total price of 1 billion to 2.5 billion rials during the period.

According to the CBI report, rents are also rising in line with the inflation rate. Rents in Tehran and across Tehran Province registered a year-on-year growth of 10.8% and 9.7%, respectively.

Lackluster Construction

However, according to the secretary of the Builders Association, Farshid Pourhajat, growth in home prices in a few districts in Tehran does not mean the housing sector has entered a booming phase.

“If the market is really booming, the signs should be obvious in the construction sector which is not and the market is hot only in a few districts that have special attraction for investors and benefit from better public services,” Pourhajat was quoted as saying by ISNA.

The official noted that a series of events that started six years ago significantly reduced the value of Iran’s national currency and which hurt the people’s purchasing power.

“The government should have supported home buyers during that era but home loans were also too expensive and people had to open an account and invest for a long time to become eligible for loans,” he recalled.